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The Red Roof Hotel Chain, with New Owners and a Relocation Back
 to its Hometown Columbus, Ohio, Working on Image and Expansion

By Amy Saunders, The Columbus Dispatch, OhioMcClatchy-Tribune Regional News

Apr. 18, 2008 --Modern design, flat-screen TVs, granite countertops, stone- feature walls -- if this doesn't sound like Red Roof Inn to you now, the company hopes it will soon.

The budget hotel chain, which recently moved its headquarters back to Columbus after eight years in Dallas, is trying to boost its image as it begins an expansion that will double its size within a decade.

Every new hotel will take on the look of the next-generation prototype, which also features trendy lighting and bathroom fixtures, an iPod plug-in station, and hardwood floors instead of who-knows-how-clean carpet.

The new design will cost Red Roof about $50,000 per room to build, or about $5 million for a 100-room hotel, not including property costs. Because the new buildings are more efficient than the chain's old hotels, there's no change to the overall construction cost.

Red Roof Inn's 350 existing hotels are going through a $250 million renovation that will leave them looking similarly modern, though they won't have the same features as the new hotels.

The chain hopes to appeal to travelers who might not typically stay at a budget hotel, CEO Joe Wheeling said. Additionally, a slow economy is helping to create business.

"Clearly, you see people trading down," Wheeling said. "We think people will trade down to this and really love it. We want to be the pre-eminent chain in the economy segment."

The company doesn't expect to change its price structure because of the new hotels, though rates vary by market, Wheeling said.

The size of other budget hotel chains makes Red Roof's goal to be the industry leader easier said than done, said Jeremy Glaser, an analyst with Morningstar who follows hotel and lodging stocks.

Red Roof Inn's expansion will take the chain to 600 or 700 hotels, about 60 percent of which will be owned by the company.

Super 8 and Days Inn, the two largest economy chains and both part of Wyndham Worldwide, have 2,081 and 1,833 independently owned locations, respectively.

"Customers don't necessarily have a ton of differentiation at the economy level," Glaser said. "It's a lot of other things -- location, whoever has the cheapest price that night -- that are going to win out."

And Red Roof Inn's competitors also have modern upgrades in the works.

A renovation option that soon will be available for Super 8 franchisees has sky-blue walls, flat-screen TVs, hardwood floors and retro black-and-white photographs.

"It helps us find a younger customer base, while at the same time it has a very good appeal for our core customer," said John Valletta, president of Super 8 Worldwide.

Days Inn will unveil a prototype to franchisees early next year, said Ken Greene, a group president for Wyndham Worldwide who oversees the Days Inn, Howard Johnson and Travelodge brands.

Future hotels will feature flat-screen TVs and aim to better accommodate business travelers' needs.

"We haven't always been catering to that segment, but as businesses start to hurt, you start to see people who stayed in upscale or mid-scale hotels are now required to stay in the economy segment," Greene said.

Red Roof Inn's Wheeling said it's easier for his company to shape its image than it is for more mature brands.

The hotel was founded in Columbus in 1972 and was later sold to European hotel company Accor SA. In September, a group of investors purchased the chain and moved its headquarters to the Brewery District.

"If you can look at Red Roof Inn growing from 350 hotels to 600 or 700, this (prototype) becomes Red Roof Inn," Wheeling said.

As consumers grow accustomed to improved hotels across all segments, Glaser said the new Red Roof Inn design brings the chain up to new standards more than it sets the company apart.

"It's not to say that this is all for naught," he said. "But this is kind of what they almost have to do to remain competitive in the marketplace. They can't sit still -- economy hotels have to keep up."

asaunders@dispatch.com

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To see more of The Columbus Dispatch, or to subscribe to the newspaper, go to http://www.columbusdispatch.com.

Copyright (c) 2008, The Columbus Dispatch, Ohio

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